The changing culture of boards.

• Author: Kenny, Roger M.
• Position: Corporate boards

The doors of the boardroom have swung open, pushed not only by institutional investors but also by the business press and the public at large. What used to take place in a strictly closed forum has now moved into a more open arena.

Governance has become a household word and governance issues are now candidly discussed. In some cases, boards are rediscovering and redefining themselves, recognizing that they were created for a different era and that some changes in governance practices and procedures are necessary to become truly effective in today's business environment.

At Boardroom Consultants, we often see this occur when a new CEO takes over. In an ideal situation, the new CEO wants help from the board and working together can reaffirm the directors' role as stewards for the owners, exercising outside independent judgment and assuring the company is clear about its vision, long-term strategies, and management appraisal systems.

There are a number of examples of already well-noted changes taking place in governance. We have seen how formal performance reviews of the CEO have had a most substantive effect in producing stronger boards. Our advisory board of 18 former CEOs, who now serve as multiple directors, have said frequently that if CEO performance is properly evaluated, then many board governance issues seem to logically fall into place.

Other changes have influenced the culture of boards -- how directors interact as a group and with management. There are some basic elements that define board culture -- shared by all boards but that also differentiate each and every one. The culture of a board comes into focus when we compare its form versus substance. A review of a board's governance will never be understood until both are defined.

Overall, those boards more dedicated to form immerse themselves in reviewing trivia in painful detail. Substantive boards stick with the "big picture" -- strategy, performance, shareholder return, public issues. They leave technical reviews to committees like audit and compensation. One thing is certain: no matter how much the content, be it macro strategy or microscopic inspection, outside directors are playing a bigger role in setting the agenda. That shift in control will prove to be a key to good governance and, ultimately, a path toward greater corporate value.

If you want to get a quick view of a board's culture, define the style of the board meetings themselves. Some boards are formal, reserved...